Washington, D.C. witnessed a rare exhibition of bipartisanship March 8 when both sides of the House passed an act that eases investor funding for businesses looking to go public. The Jumpstart Our Business Startups, a.k.a. JOBS Act, is designed to ease investor regulation (and many accounting rules) on companies that want to go public with less than $1 billion in annual revenue.
So what does this mean for small-business owners? It depends on whom you ask.
Jennifer Schaus is a government contracts consultant in Washington, D.C., who worries that the deregulation will lead to fraud.
“It will help the companies that are legitimate get the funding they need and [will help] their businesses grow, but on the other side, we could start to see some people putting money into businesses that are fraudulent,” she says. “At that point, we might see government needing to come to the rescue. People [investors] could get taken advantage of.”
Schaus thinks that ease of access to initial public offerings could help job creation in the long run, but also believes that the passing of such legislation has more to do with this year’s election season than serving as a real benefit to small-business owners.
“It looks good and sounds good, but we’ll have to wait and see what happens when put into practice,” she says.
Caren Z. Turner, CEO of Turner Government & Public Affairs, a lobbying group in Washington, D.C., believes the JOBS Act isn’t enough to help jump-start the economy. Like Schaus, she too worries that the deregulation provision will spur fraud.
“It’s a pyrrhic (weak) victory for the Obama Administration; they’ve won the battle but lost the war,” she says. “When it comes down to it, small businesses are not suffering from a lack of capital, they are suffering from a lack of demand for services. This Act doesn’t address the issue of growth in the economy. You can raise the money, but if customers don’t have the funds to buy products it doesn’t do anyone good.”
Quoting the Bureau of Labor Statistics, Turner says most U.S. small businesses average around just four employees and have no interest in going public. Instead, they are focused on capturing customers. What will help capture more business?
According to Turner, the answer is in public infrastructure, including roads and bridges.
“On March 14 the Senate passed a transportation bill that equals $109 billion over two years to pay for roads, bridges and tunnels,” she says. “It still needs to pass in the House, but if it does, the job creation estimates are around 3 million. There aren’t any job estimates for the JOBS Act.”
Why should small business owners care about the transportation bill? Turner explains.
“The more people working to fix transportation systems means the more money infused into the economy, and more people willing to buy your goods and services,” she says.
Turner suggests voters express their opinions to U.S. Congresspersons by calling 202-225-3121.
For more information on the JOBS Act, check out The White House FAQ.
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